Ed’s Daily Notes for November 5th   3 comments

Bloomberg: EU Lowers Euro-Area Growth Outlook as Debt Crisis Lingers

Before you hop into European stocks, consider this:

The European Union trimmed its forecast for euro-area growth next year as the economy struggles to gain momentum with the debt crisis dragging into a fifth year and unemployment at a record.

Gross domestic product in the 17-nation currency bloc will rise by 1.1 percent in 2014, less than the 1.2 percent forecast in May, the Brussels-based commission said today. Unemployment, now at its highest rate since the euro was introduced, will be 12.2 percent in 2014, higher than the 12.1 percent predicted six months ago.

…Signs of a fragile recovery in 2014 disguise a north-south divide in the euro area, in which the economies of Germany, Belgium, Estonia and Ireland are predicted to gain momentum next year, while Spain, Greece, Italy and Portugal are projected to experience much weaker growth rates. The exceptions are Finland and the Netherlands, whose growth figures now lag behind their northern neighbors.

Keep in mind those growth numbers might be optimistic. What is truly staggering is the prediction for increased unemployment. If they are growing, how does unemployment increase?

I won’t say “don’t invest in Europe”, but I will say pick your stocks VERY carefully.

Weekly Standard: In Virginia, Obamacare Central to Cuccinelli’s Closing Argument

Normally, I wouldn’t care about the Virginia governor’s race. However, this one could have national implications for next year’s mid-term elections:

Ken Cuccinelli may have finally found a winning message in his bid for governor of Virginia, and not a moment too soon. With just a day before Virginians head to the polls, Cuccinelli spent Monday morning targeting his Democratic opponent Terry McAuliffe and other national Democrats for their support for Obamacare.

…”The biggest single budget decision the next governor will make will be to support or oppose the expansion of Obamacare with the Medicaid expansion,” Cuccinelli said. “Terry McAuliffe wants to expand Obamacare even farther. I do not.”

But here is what makes it interesting:

McAuliffe, meanwhile, campaigned Monday morning in Annandale with Vice President Joe Biden, and President Barack Obama spoke in Arlington Sunday. Neither Obama nor Biden mentioned Obamacare in their speeches.

At the moment, Obamacare is in “failure” mode. It will be curious to see if Democrats can win this race running away from Obamacare. While I won’t call it definitive, it could be telling, especially if Obamacare is still in “failure” mode next November.

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Posted November 5, 2013 by edmcgon in Economy, Market Analysis, News, Politics

3 responses to “Ed’s Daily Notes for November 5th

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  1. Today I was looking at the financials in Belgium and France. KBC more than doubled in the past year; BNP, AXA en Soc Gen almost doubled. This is kind of crazy. Stockprices don’t consider any risk. Today I also read some posts at belegger.nl – there is so much optimism. I don’t understand why. I can understand you wanna be optimistic and you actually are, but almost nobody takes a look at the risks. Fundamentally nothing has nothing changed on the positive side, even made worse – yet, so many are bullish, even if all the QE’s are left out. There is only pity for the ones on the side. Baltic states are in trouble, PIGS (I left Ireland out, cause I think they are really working on it) are deteriorating in the longer-run, Hungary is becoming a problem again. I don’t see how these countries will be alright in the future. And considered all the European banks (not in the least German banks) have a big exposure to them, I think they might blow up in the near-future (but when? I do not know).

    • plas,
      It’s all about the QE. We all know this won’t end well, on either side of the Atlantic. We just don’t have a date for the crash yet.

      • No, that is what I wanted to say. The john doe investor on the forums don’t have a clue. They only say “buy higher, sell higher”, they are sure everything is fine and doomsayers are laughed at – it looks like they have lost the connection with the fundamentals.

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